F5 questions

mark057

I've just completed a question which required an incremental revenue and cost calculation which was alright to do.

Then in part c they asked whether it was a good thing or not for a retail business to offer discounts on a Sunday
or not.

I argued:

1) Sunday could be a good day to offer promotions as many have time off from work and would be more interested in taking a look at the promotions on a Sunday as opposed to a working week.

2) The business is retail so a Sunday might be the best day to offer promotions as people will have more time to
spend in the shops without work. If the business had been commercial; however, the promotion and discounts
would have been better offered on a weekday when businesses were operating normally.

3) Projected sales increases of 60% in the context of the question appeared to support the decision to sell on a
Sunday, particularly as it was predicted the sales increases would come from new customers.
I did; however, qualify my answer by saying this assumption would be dependent on the projections being correct.

ACCA answers were as follows:

1) Sunday discounts and promotions may be a bad idea as normal customers may transfer the day which they shop to take advantage of discounts, thereby reducing overall sales margin.

2) Customers buying in the week may be angry having to pay higher prices and may complain.

3) Discounts and promotions may lead to a sense of cheaper quality and reducing brand value.

I have become really disheartened by this sort of question as I feel I'm saying sensible things about a given
context but ACCA always seem to come up with something different.

Surely they have to attribute decent marks to sensible comments even though it may not meet their world view of the context?

Mark

mark057

Any feedback greatly appreciated on this.

How fussy are ACCA on this issue? Anyone have any experiences?

SandyHood

You have fallen into a trap that students before you have fallen into and which will be there for students in the future to fall into.

If you had arrived at college early with your homework, and asked a friend to show you his/her homework answer I doubt you'd have such a crisis of confidence
So why let the model answer cause you so much trouble?

Look at the mark scheme, that gives you more useful ideas

Changing customer buying pattern 2
Complaints risk 2
Quality link 2
–––
Maximum 4

and then see the comments made in the examiner report.
See Q 4 from
http://www2.accaglobal.com/pubs/students/acca/exams/f5/reports/f5_0609.pdf

The examiner (Ann Irons) has changed since this exam (Geof Cordwell), but both would be looking for business sensible answers.

So -
...........Changing customer buying pattern 2
...........Complaints risk 2
...........Quality link 2

Would not be an exhaustive list and sensible alternatives would be allowed such as your own

I like the issue of sales on Sundays taking away sales from other days (what I used to hear some of the marketing staff in one firm refer to as cannibalising sales)

mark057

Thanks for this Sandy.
The answers in the revision book seem so authoritative so I was worried they would not accept anything else.